AINS 101 EXAM PREP QUESTIONS AND
ANSWERS STUDY GUIDE
●● Transferring
Answer: The act of transferring the financial consequences of
unanticipated events to an insurer
●● Pooling
Answer: All insureds share the costs of eachothers' losses. Insurers
combine all premiums collected to pay losses as they occur
●● Personal Insurance (Property)
Answer: Protects an insured's assets by covering the cost of repairing or
replacing property that is damaged, lost, or destroyed.
●● Personal Insurance (Liability)
Answer: Provides payments for injury to others or damage to other's
property for which the insured is legally responsible. Also covers the
cost to defend the insured against related lawsuits
●● Personal Insurance (Health)
Answer: Protects individuals and families from financial losses caused
by sickness or accidents
,●● Personal P&C Insurance (Homeowners)
Answer: Provides protection when people's homes and/or belongings are
damaged or stolen and liability coverage for situations such as the family
dog biting a desk
●● Personal Auto Insurance
Answer: If insured is at fault in an accident, provides coverage for
personal bodily injury to another person or damage to another person's
auto. Also provides coverage for damaged to insured auto (not wear +
tear). Legally required
●● Personal Umbrella Insurance
Answer: Provides additional protection for people with a high potential
for large liability losses
●● Commercial Property Insurance
Answer: Covers damage to buildings or their contents that results from
fire, vandalism, and other causes of loss
●● Commercial Crime Insurance
Answer: Protects against losses from theft of business property and
money, including employee theft
,●● Commercial General Liability
Answer: Protects a business against its legal liability to others for bodily
injury or property damage
●● Commercial Auto Insurance
Answer: Covers liability for bodily injury and property damage caused
by the use of the businesses' autos and also damage to the business own
autos when they are in an accident
●● Workers Compensation
Answer: Covers legally required benefits that businesses are required to
pay to their employees for job-related injuries and illnesses
●● Commercial Umbrella Insurance
Answer: Provides additional liability limits beyond those provided by
other commercial policies, protecting a business in the event of large
liability loss
●● Stock Insurers (Private Insurers)
Answer: Objective is to earn a profit, and they attract stockholders by
the expectation of investment returns. Many large PC insurers are this.
●● Mutual Insurers (Private Insurers)
, Answer: Share profits, pay dividends to policyholders as a return of a
portion of premiums paid. Some large insurers and many regional
insurers are this.
●● Surplus Lines Insurers (Private Insurers)
Answer: Provide insurance coverages unavailable in the standard market
●● Reinsurance (Private Insurers)
Answer: Allows a primary insurer to transfer some loss exposures to
another insurer, the reinsurer. It can help a small insurer provide
insurance for large accounts.
●● What role does the government play in insurance?
Answer: - If a type of insurance is required, the government makes sure
it is available at a reasonable price
- Reduces time or resources needed to obtain insurance coverage
- Can help find insurance for accounts that private insurers are unwilling
or unable to provide
●● Pure Risk
Answer: A chance of loss or no loss, but no chance of gain.
●● Speculative Risk
Answer: A chance of loss, no loss, or gain.
ANSWERS STUDY GUIDE
●● Transferring
Answer: The act of transferring the financial consequences of
unanticipated events to an insurer
●● Pooling
Answer: All insureds share the costs of eachothers' losses. Insurers
combine all premiums collected to pay losses as they occur
●● Personal Insurance (Property)
Answer: Protects an insured's assets by covering the cost of repairing or
replacing property that is damaged, lost, or destroyed.
●● Personal Insurance (Liability)
Answer: Provides payments for injury to others or damage to other's
property for which the insured is legally responsible. Also covers the
cost to defend the insured against related lawsuits
●● Personal Insurance (Health)
Answer: Protects individuals and families from financial losses caused
by sickness or accidents
,●● Personal P&C Insurance (Homeowners)
Answer: Provides protection when people's homes and/or belongings are
damaged or stolen and liability coverage for situations such as the family
dog biting a desk
●● Personal Auto Insurance
Answer: If insured is at fault in an accident, provides coverage for
personal bodily injury to another person or damage to another person's
auto. Also provides coverage for damaged to insured auto (not wear +
tear). Legally required
●● Personal Umbrella Insurance
Answer: Provides additional protection for people with a high potential
for large liability losses
●● Commercial Property Insurance
Answer: Covers damage to buildings or their contents that results from
fire, vandalism, and other causes of loss
●● Commercial Crime Insurance
Answer: Protects against losses from theft of business property and
money, including employee theft
,●● Commercial General Liability
Answer: Protects a business against its legal liability to others for bodily
injury or property damage
●● Commercial Auto Insurance
Answer: Covers liability for bodily injury and property damage caused
by the use of the businesses' autos and also damage to the business own
autos when they are in an accident
●● Workers Compensation
Answer: Covers legally required benefits that businesses are required to
pay to their employees for job-related injuries and illnesses
●● Commercial Umbrella Insurance
Answer: Provides additional liability limits beyond those provided by
other commercial policies, protecting a business in the event of large
liability loss
●● Stock Insurers (Private Insurers)
Answer: Objective is to earn a profit, and they attract stockholders by
the expectation of investment returns. Many large PC insurers are this.
●● Mutual Insurers (Private Insurers)
, Answer: Share profits, pay dividends to policyholders as a return of a
portion of premiums paid. Some large insurers and many regional
insurers are this.
●● Surplus Lines Insurers (Private Insurers)
Answer: Provide insurance coverages unavailable in the standard market
●● Reinsurance (Private Insurers)
Answer: Allows a primary insurer to transfer some loss exposures to
another insurer, the reinsurer. It can help a small insurer provide
insurance for large accounts.
●● What role does the government play in insurance?
Answer: - If a type of insurance is required, the government makes sure
it is available at a reasonable price
- Reduces time or resources needed to obtain insurance coverage
- Can help find insurance for accounts that private insurers are unwilling
or unable to provide
●● Pure Risk
Answer: A chance of loss or no loss, but no chance of gain.
●● Speculative Risk
Answer: A chance of loss, no loss, or gain.
